8 Things You Should Know Before Investing In Ethiopia

Economic investments in any country across the world are vulnerable to positive and negative incidents in the social and political patterns of a nation.

Ethiopia, a landlocked country in the Horn of Africa with a population of about 96 million people, is no exception. The country has one of the fastest growing economies in Africa with an average 10.3 percent growth rate in the recent years.

Despite this high growth, the World Bank ranks Ethiopia 104th out of 183 countries on its Ease of Doing Business Index due to regulatory hurdles, legal threats to property, and the time and money spent on registering a business, ensuring right of title to property, and acquiring licenses.

Below are some of the things any potential investor should know before investing in Ethiopia:

Politics

It is a federal republic with eight regional states and two administrative cities — Addis Ababa and Dire Dawa. It has a two-house parliament — Lower and Upper House. The government likes to say it has a multi-party democracy, but it’s really a single party state. The ruling party is Ethiopian People’s Revolutionary Democratic Front. There are protests that the government uses intimidation to stay in power.

Economic growth

It is one of the fastest growing economies in the world. Its average growth rate is about 10.3 percent. The government has undertaken reforms that have opened up the nation to investors. This has expanded the agricultural and manufacturing industries. Unemployment rate is about 17 percent.

Infrastructure

The country opened up its first light railway in September 2015. This is one of the solutions to the road transport problems experienced in Addis Ababa. Construction of a road that connects the Port of Mombasa in Kenya to Addis Ababa is set to be completed by the end of 2016. This will reduce the shipping and transports costs between Kenya and Ethiopia. It will also increase the volume of Ethiopian goods that are transported through the Port of Mombasa. The country is also constructing several hydro-electric power projects including the Grand Renaissance Dam on River Nile.

Human rights

The nation’s track record in human rights is questionable. General elections were held in May, 2015. They were marred by extrajudicial killings of four members of Semayawi Party, the main opposition party. The four were considered hard-line critics of the government. Security agencies arbitrarily arrested journalists in run-up to the elections.

Nine bloggers were detained for 500 days on accusations of using digital media to promote terrorism.

Since November 2015, there have been clashes in the Oromia region of Addis Ababa, the capital city. This has led to the death of over 200 people. The protests were sparked by the government’s plan to expand the administrative boundaries of Addis Ababa.

Terrorism

The threat of terrorism, posed by Somalia’s Al Shaba is high. The nation has taken counter-terrorism steps that have protected it from this threat. It has adopted the Ethiopian Doctrine which aims to liberate local communities, organize them to fight against terrorists. The country’s military operations are built around a solid political foundation and community development. It has mobile military posts within its communities.

Insecurity

Crime levels in the country are high. Foreigners are easy targets for criminals because they are believed to be in possession of valuables. Petty crimes conducted by youthful gangs are a concern in the capital, Ethiopia.Gambella-Gumuz regions in western part of the country, Somali region in eastern Ethiopia and the Ethiopia-Eritrea border are the other parts which have reported deadly incidents of crime and violence since 2012.Cyber crime is however still low because technology absorption amongst the population is still very limited.

Corruption

While corruption is a major problem in the Horn of Africa country it is much better than other large African economies including Kenya, Nigeria and South Africa. Ethiopia was ranked 103 out of 175 countries in the global corruption index in 2015. Administrative states of the nations have their established anti-corruption commissions to fight the vice. The national anti-corruption commission, Federal Ethics and Anti-Corruption Commission that was established in 2001, undertakes countrywide ethics education in efforts to create awareness amongst the population on the negative effects of the social vice.

Money laundering

It is one of the African countries that has successfully tackled money laundering. The country has made several key measures to prevent and suppress the crime. In 2015, World Bank and Eastern and Southern Africa Anti-Money Laundering Group, conducted a joint assessment of the nation’s anti-money laundering and counter-terrorism financing. The report showed that the country has solid legal framework and measures to fight the crime.